Daimler outperforms expectations with surge in profits

Daimler's first-quarter net profit almost doubled compared to a year ago helped by demand for the new Mercedes-Benz C-Class saloon and surging truck sales in North America.

Analysts were anticipating a strong quarter at the Stuttgart-based automotive conglomerate due to an 18 per cent jump in car sales at the premium Mercedes-Benz brand in the first three months of the year, which outpaced growth at rivals BMW and Audi. Truck sales - a barometer of the health of the economy - climbed 18 per cent in North America compared with the first quarter a year ago.

Still, Daimler managed to deliver a surprise. Operating profit from businesses surged 41 per cent to €2.9bn - beating a €2.65bn consensus forecast compiled by Reuters. Net profit leapt 89 per cent to €2.05bn. 

The closely watched profit margin at Mercedes-Benz increased to 9.2 per cent from 7 per cent in the same quarter a year ago, helped by improved vehicle pricing and efficiency measures. 

Bodo Uebber, chief financial officer, said that Daimler was profiting from its 'strong product portfolio". 

The company continues to forecast "significantly higher" car and truck sales in 2015 and a significant increase in full-year operating profit.

Volatile foreign exchange rates had a slight negative impact on the car business in the first quarter but increased the profitability of the truck unit.

Daimler's US Freightliner truck business manufactures products locally and books sales in dollars. The US currency has appreciated strongly against the euro during the past year. 

The company now expects a €1bn positive earnings contribution from currency swings in 2015, compared with a previous forecast of €500m.

Total revenues jumped 16 per cent to €34.2bn in the first quarter and net cash increased to €20.5bn at the end of March.

Dieter Zetsche, Daimler's chief executive, was rewarded for the company's recent strong performance earlier this month when he was promised a three-year contract extension when his current agreement expires next year. 

Daimler said Europe's economic prospects had brightened since the beginning of the year and therefore it raised its forecast for the European truck market growth to between 5-10 per cent. It previously forecast a flat development there.

Separately on Tuesday German truckmaker MAN, owned by the VW Group, reported a 50 per cent decline in first-quarter operating profit, which it blamed on a further deterioration of the Brazilian truck market, to which it is more exposed than Daimler.

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